Tuesday, November 30, 2010

It's Only Money

I am always appalled to see people in positions of responsibility cutting corners, avoiding regulations, and employing any number of methods of cheating in order to fill their own pockets at the expense of those they were meant to protect. So, if you think I am talking about some third world country, or the past earthquake in China where many innocent children were killed in unsafe school buildings, you would be wrong. No, I can only watch what is happening to the U.S. financial system with a growing sense of horror.

I learned a long time ago through exercises in loss protection that systems are designed in such a way that it takes a minimum of two parties in collusion with each other to defeat the security measures. One, or the other, by themselves is not enough - it takes two. So, the more I see how close the regulators and big money in Wall Street, and everywhere else, have grown, the less I feel I can trust them.

I understand that lady justice is blind, and that things within those circles turn very, very slowly. The result is most of the people who got the world into this mess are still making it worse. The same people who demand exorbitant salaries because they have to spend long hours at the helm navigating the ship, now tell us that despite having received their compensation, and their bonuses, they didn’t actually know what was going on. It wasn’t their fault - nobody knew! Since when is incompetence any real excuse? I can just see me trying that one on my employer! Meanwhile, the regulators are busy running around plugging little holes in the dyke as the water rises higher, and higher.

The real problem is people will want to see some accountability within the system, or else it will only be a matter of time before they start to take matters into their own hands. Many may be lying low hoping to eventually invoke the statute of limitations, but I don’t know if you have ever noticed, but if you really, really anger someone, they can take a very long time to forget, if ever! Now I am not inciting riots, or even believe that violence is ever the proper solution, but how much, how far, do they think people are willing to go?

Do the cheaters actually believe they are all that much smarter than everyone else? The crisis is past. Next year will be better. Apparently time in the market is the financial services solution for anything and everything. Given enough of it, all manner of problems can be solved. It sure as hell removes any and all responsibility!

What actually got me on this rant was the notion that it is not where a company is domiciled that is important. Instead, it is a matter of from whence the income streams originate. By that logic, almost any U.S. company that does business with growing third world countries is a huge investment opportunity. I am even told stock valuations for U.S. companies are favourable these days. The problem as I see it, is, to invest in those companies listed on the U.S. stock exchanges (since they are domiciled there), I have to buy shares in U.S. dollars. Given the time it is going to take for the return of any real confidence in the U.S. dollar (and not just panic buying), why do I want to forfeit much better opportunities? I know there is no shortage of snake-oil salesmen who want us to believe in their product, but me, I’m not buying.

Given the fact I can buy Exchange Traded Funds (another hugely untold story within the traditional financial services industry) in Canadian dollars which provide investment opportunities from all over the world, why would I participate in the current madness involving the currency of the place which was once the greatest exercise in capitalism on the planet? Surely I am not alone when I say, without accountability, I'm not willingly going to hand over any of my hard earned money. Sorry. Nothing personal - it’s just business. It’s how business used to be, and still should be conducted. After all, the rest of us less-than-powerful people are held accountable for how we spend our, and most especially, other people’s money.

About Me

A self-styled buyer/seller of equities on the Toronto Stock Exchange, I have since retired from having to work for others and am currently pursuing charitable interests.

Twenty years ago I realized there were not nearly enough hours in the day for me to earn my way to financial freedom. The alternative, as I saw it, was to build my wealth by putting it to work earning the best returns possible. Even after what would be almost 20 years working in the financial services industry, I remained unprepared for what that would mean.

Today, after starting my own investing club, my goal is to teach others what I have learned during my time working in the industry, from reading countless books, attending many seminars, and conducting an endless amount of trial and error. The result is a healthy return based on a combination of company analysis, chart monitoring, and, more recently, a reliance on leveraged funds.

Disclosure: Stocks mentioned are one’s owned at various points in time.